by Tim Brady
End of the year is perfect time to review your business plan
It’s that time of year. Do you know where your business is? If not already completed, it’s time for that inquisition as to where your business was a year ago, six months ago, and where it stands today. This is the only way you can determine its direction for the following year.
Yes, this is the time for family, friends and holiday celebrations. Unless you have a definitive plan of action for your company for next year, however, the celebration may be very short-lived.
Let’s examine the process of evaluating your company: revenue, costs, customers, vendors, employees, and contractors.
Review and update your business plan.
Many people think a business plan is a document required to obtain financing and attract investors. While that’s one purpose of a business plan, its most important purpose is as a road map with directions you can reference to move your company towards continuing profits. Review your plan annually at a minimum; evaluate whether the original plan is working; and make adjustments where needed to sustain and grow the operation.
Not having a business plan
—or not conducting a regular review of it—is like having a set of complicated directions to a delivery point and attempting to find it by relying on your memory. The chances of making a wrong turn and ending up someplace you hadn’t intended are increased substantially.
Make sure your financial records are complete and organized, including your profit and loss statement, balance sheet, revenue statement, and cash flow statement. This allows you to check the financial health of your business.
Did you achieve the revenue goals you established a year ago? At what rate did costs go up or down over the past year? Did your overall business improve or decline? Is there a pattern that can be discerned across your financials? Is this a positive or negative pattern? You’ll see a distinct picture develop from a study of these documents.
Graphs of each of these documents will make it easier to decipher and distinguish patterns. You’ll more easily see when boom periods occurred and when low revenue times happened, and how they affected both profitability and costs during each of these periods.
You most likely noticed some inefficiencies in your business from the financials review. What were the recurring problems that you encountered? Maybe your load finding process can be streamlined, or shippers’ and receivers’ loading/unloading can be streamlined. Maybe it’s time for defined freight lanes for each of your trucks. Analyze these weaknesses and develop a strategy for fixing them.
Marketing and sales.
Review your marketing plan. If your strategies aren’t working effectively, develop ideas to reach out to current customers while also finding and cultivating new ones. If you don’t have a marketing plan, make that a priority for the coming year.
This is also a good time to review your sales strategy. Good customer relationships are important to your business. Know that 80% of your sales will come from 20% of your customers. Identify those customers and contact them. A freight broker is as much a customer as any direct shipper, so reach out to the brokers with which you have a strong business relationship. Send a personalized, hand-written holiday card to your most important customers. It’s a great way of saying “thank you” and builds customer loyalty.
Employees and contractors.
Evaluate the effectiveness and efficiency of your employees and contractors over the last year.
Did they achieve the goals you established for them? Did you receive favorable reports from shippers, receivers, freight brokers, or others they had contact with regarding your business? What was lacking in customer service that needs to be addressed? Did any of them shine in how they handled a difficult situation? Could this experience be used to teach others how to handle the next challenge?
What was your employee turnover rate for the year? How does that compare with your driver turnover for the same period? What were the overriding reasons people gave for leaving? How can you address, reduce or eliminate these as reasons for drivers quitting?
Which employees or contractors are the happiest with their jobs? Why are they pleased with their choice of employment? How can you encourage others to become a part of your team?
Identifying the relative strengths and weaknesses of your company is easy once you’ve answered these questions. You can then determine what is a threat to the business and where opportunities in the coming year may lie.
Develop a strategy to minimize these weaknesses and threats so you can benefit from the strengths to take advantage of the opportunities that present themselves. From the strategy developed through the evaluation of critical business areas and goals, you can adjust, change, delete and improve the direction of your business plan.
Managing a business is like helping an errant, rebellious teenager transition into adulthood. If the business is ignored, it’ll take on a mind of its own. The longer you delay taking control, the more control you’ll lose. The best way to move a teenager or business forward is to provide some freedom that allows each to take its own course but maintain the lines that help you keep it from going over the edge.
With a pull here and a tug there, both will move forward: one towards adulthood and the other to profitability and sustainability.